Banks Said to Weigh Suspending Dealings With SAC as Charges Loom (Bloomberg)
Deutsche Bank AG and Goldman Sachs Group Inc. are among firms weighing the reputational and financial consequences of continuing to provide trading, lending and prime brokerage services to SAC, one of Wall Street’s largest trading clients, said the people, who asked for anonymity because the talks aren’t public. Prosecutors plan to charge SAC, the hedge fund founded by Steven A. Cohen, as soon as today as part of a probe of insider trading, a person familiar with the matter said. ... The banks face a conundrum, either being seen as abandoning a long-term client or assisting a firm targeted for prosecution. At the same time, the companies are seeking to ensure that loans and trading agreements are properly collateralized in case SAC is forced to close, one of the people said.
Credit Suisse Posts $1 Billion Profit (DealBook)
Credit Suisse, one of Switzerland’s largest banks, said on Thursday that profit in the second quarter rose by a third, thanks to higher earnings at its investment banking operation. Profit rose to 1.04 billion Swiss francs ($1 billion) in the three months ended June 30, from 788 million francs in the period a year earlier. That compares with a forecast of 1.017 billion francs by a group of analysts polled by Thomson Reuters. ... “Our business model is performing well and we continue to make progress in reducing our cost base and balance sheet,” Mr. Dougan said in a statement.
Lazard Profit Beats Estimates on Asset Management, Merger Advice (Bloomberg)
Lazard Ltd., the biggest independent merger-advisory firm, said second-quarter profit rose 81 percent, beating analysts’ estimates as revenue from asset management and merger advice increased. Earnings rose to $60 million, or 45 cents a share, from $33 million, or 25 cents, a year earlier, the Hamilton, Bermuda-based firm said today in a statement. The average estimate of 11 analysts surveyed by Bloomberg was for per-share earnings of 33 cents.
How much is Fed aid to U.S. corporate profits worth? (Reuters)
"People underestimate the extent to which quantitative easing has benefited the S&P," said Robbert van Batenburg, director of market strategy at brokerage Newedge USA LLC in New York. He called the effect akin to "an athlete on steroids." The Fed's effect on corporate earnings is difficult to quantify. Van Batenburg estimates that corporate savings on interest expense after rates fell to historic lows has accounted for about 47 percent of S&P 500 earnings growth since 2009.
Fraternities Lobby for Tax Break Without Hazing Penalties (Bloomberg)
About 40 percent of U.S. senators, and 25 percent of U.S. representatives, belonged to fraternities or sororities in college. On April 24, more than a dozen of these grateful alumni extolled Greek life at an annual $500-a-plate dinner in a Washington hotel ballroom for “FratPAC,” the industry’s political arm.
One by one, they took the podium and praised fraternities for teaching them loyalty, leadership, and practical skills. “We learned to tap a keg,” declared Representative Steven Palazzo, a Mississippi Republican and Sigma Chi brother, who then yelled a cheer as hundreds of FratPAC donors applauded.
Merrill bias suit: Women employees claim they were given book urging them to 'stroke men's egos' to advance (NYP)
Female trainees at Merrill Lynch’s flagship Manhattan office were given copies of “Seducing the Boys Club: Uncensored Tactics From a Woman at the Top” by their boss — who also ordered them to attend a talk with the author, three former employees claim in a bias lawsuit. The author encourages women “to stroke men’s egos with flattery and manipulation in order to succeed in a male-dominated environment such as Merrill Lynch,” the suit states. ... They were also pressured to attend gals-only events on topics like “dressing for success” and “preparing healthy meals while working full-time.”
Bond Investors Turn to Cash (WSJ)
Investors withdrew an estimated $43 billion from taxable bond mutual funds last month, the largest-ever monthly outflow, according to the Investment Company Institute. The debt-market swoon was fueled by worries that the Federal Reserve was softening its commitment to keeping interest rates low. Rising interest rates mean lower bond prices. Many observers expected to see those flows turn to funds tracking U.S. stocks. But in a twist, the main beneficiary of the rush out of bonds has been money-market funds, which are cash-like investments that appeal to safety-minded investors.
Facebook shares leap on mobile ad surge (FT)
Facebook shares leapt as much as 20 per cent in after-hours trading in New York on Wednesday after the social networking company beat analyst expectations on revenues and profits. On a pro forma basis tracked by Wall Street, second quarter net income rose 65 per cent to $488m compared with the same quarter last year on revenues up 53 per cent to $1.81bn, ahead of analysts’ expectations of $1.62bn. Earnings per share of 19 cents exceeded expectations of 14 cents per share. Sheryl Sandberg, chief operating officer, said spending increased across all categories of advertisers. Ecommerce companies, in particular, doubled spending, and the number of local businesses advertising on the site globally also doubled to 1m.
Nasdaq earnings slip on deal costs, while revenues rise (Reuters)
Nasdaq OMX Group reported on Wednesday a lower second-quarter profit, mainly due to acquisition costs related to the closing of two deals by the transatlantic exchange operator. Net income attributable to Nasdaq totaled $88 million, or 52 cents per diluted share, down from $93 million, or 53 cents a diluted share, a year earlier. Nasdaq closed a $390 million deal to buy Thomson Reuters's investor relations, public relations and multimedia services businesses, during the quarter. It also completed a $750 million deal to buy electronic Treasurys-trading platform eSpeed from BGC Partners.
Hong Kong boosts renminbi liquidity to ease credit crunch (FT)
The Hong Kong Monetary Authority has taken fresh steps to improve renminbi liquidity, a month after a credit crunch in China spread to the city’s banking system. Hong Kong’s central bank announced on Thursday it would add two additional renminbi lending facilities to its existing seven-day liquidity tap. As of July 26, the HKMA will offer one-day funds, as well as overnight funds in renminbi.
Rich Move Assets from Banks to Warehouses (Spiegel)
Recently, even Swiss bankers have been sending letters to their clients, asking them to cooperate with tax authorities and consider turning themselves in. This only heightens fears of the tax authorities. "We assume that a total of hundreds of billions of francs will flow out of Switzerland," said the head of the asset management division of UBS, a major Swiss bank, in late 2012. But not everything the banks are losing is actually leaving Switzerland. Customers are admittedly emptying out their accounts and safe deposit boxes. But partly as a result of the many uncertainties in the financial markets, a growing share of the money is being invested in tangible assets, such as art, wine and classic cars. A total of $4 trillion has reportedly been invested in "treasure assets," a category including various kinds of precious objects. This requires warehouse space that satisfies the most stringent security requirements. Swiss military bunkers blasted deep into Alpine rock are in great demand. But the free ports in Geneva and Zurich are even more popular because they offer what Swiss banks used to: the freedoms of a tax haven and maximum discretion.
Sexy Ukrainian thief’s crowdfunding website only raised $175 of $821,000 restitution needed to keep her out of prison (NYDN)
The sexy Ukrainian thief who launched a Kickstarter-style campaign to pay off her $821,000 restitution is getting plenty of attention - but not much money. Renata Shamrakova, 28, who pleaded guilty this March to stealing nearly $1 million from Nicky Hilton's ex-husband, says goodwill messages are flooding in - and the other nasty comments are getting the delete treatment. The raven-haired beauty created the "Restitution for Renata" page on GoFundMe.com because she's terrified of going to prison for one to three years, the Daily News first revealed. Her total take so far: just $175, from three different donors. "I would like to help," a male supporter wrote on Shamrakova's Facebook page Wednesday. "I'm going to spread the word ... In the meantime I wanted to ask you ... Are you single? Because you are very beautiful and I would love to take you out sometime." The note meant a lot to Shamrakova, she told The News.
Skydiver collides with shortstop, knocking him out for the season (AP)
A skydiver parachuting in before a summer league game accidentally kicked shortstop Mattingly Romanin in the face, knocking him to the ground and, it turns out, ending his season. The 20-year-old Mattingly said Wednesday he had a concussion and was trying to take the bizarre mishap in stride. ... Romanin said he tried to duck at the last moment, but it was too late. He was hit near the temple and knocked over. Medical personnel tended to him and he got up after several minutes. Romanin recalled his immediate response: "Wow, really? That just happened?"